The DOL has issued proposed regulations for adjudicating disability benefit claims. This proposal would apply many of the procedural protections and safeguards provided under the Affordable Care Act (“ACA”) to disability claims.
Background. ERISA requires employee benefit plans to provide adequate written notice to any participant whose claim for benefits has been denied. This notice must: (i) be composed in a manner calculated to be understood by the participant, (ii) set forth the specific reasons for the denial, and (iii) afford a reasonable opportunity to the participant for a full and fair review of the decision denying the claim.
DOL regulations published in 1977 established certain minimum requirements for benefit claims procedures for ERISA-covered employee benefit plans. DOL has subsequently revised and updated these regulations to improve and strengthen the minimum requirements.
In 2010, ACA added certain provisions to ERISA that apply to group health plans, including new requirements for internal claims and appeals and external review processes. DOL’s proposed regulations make many of these ACA procedural protections applicable to the internal claims and appeal processes for disability benefits.
Proposed Regulations. The proposed regulations would incorporate the following ACA procedural protections:
- Claims and appeals must be adjudicated in a manner designed to ensure the independence and impartiality of the person involved in making the decision.
- Benefit denial notices must contain a full discussion of why the plan denied the claim and the standards behind the decision.
- Claimants must have access to their entire claim file and be allowed to present evidence and testimony during the review process.
- Claimants must be notified of, and have an opportunity to respond to, any new evidence reasonably in advance of an appeal decision.
- Final denials at the appeal stage cannot be based on new or additional rationales unless claimants are first given notice and a fair opportunity to respond.
- Claimants are deemed to have exhausted administrative remedies if the plan does not adhere to all claims processing rules, unless the procedural violation was: (i) de minimis, (ii) non-prejudicial, (iii) attributable to good cause or matters beyond the plan’s control, (iv) in the context of an ongoing good-faith exchange of information, and (v) not reflective of a pattern or practice of noncompliance.
- Certain rescissions of coverage are treated as adverse benefit determinations subject to the plan’s appeal procedures.
- Notices must be written in a culturally and linguistically appropriate manner.
Impact on Employers. Employers are advised to carefully watch for the development of these regulations. Once they are finalized, amendments will likely be needed to plan documents for ERISA-covered pension and welfare plans that provide disability benefits.
The final regulations are available at: http://www.gpo.gov/fdsys/pkg/FR-2015-11-18/pdf/2015-29295.pdf